ServiceNow Q4 2023 Earnings Report
Key Takeaways
ServiceNow reported strong Q4 2023 results, exceeding guidance across all topline growth and profitability metrics. Subscription revenues grew by 27% year-over-year, and the company raised its 2024 subscription revenues and operating margin outlook.
ServiceNow's Q4 2023 subscription revenues reached $2,365 million, a 27% year-over-year increase.
Total revenues for Q4 2023 amounted to $2,437 million, reflecting a 26% year-over-year growth.
Current remaining performance obligations (cRPO) stood at $8.60 billion, up 24% year-over-year.
The company recorded 168 transactions over $1 million in net new ACV, a 33% year-over-year increase.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Forward Guidance
ServiceNow provided guidance for Q1 2024 and full-year 2024, including subscription revenue targets and operating margin expectations.
Positive Outlook
- Q1 2024 subscription revenues are expected to be $2.510 - $2.515 billion, representing 24% - 24.5% year-over-year growth.
- Full-year 2024 subscription revenues are projected to be $10.555 - $10.575 billion, indicating 21.5% - 22% year-over-year growth.
- Q1 2024 operating margin is anticipated to be 29%.
- Full-year 2024 subscription gross profit margin is expected to be 84.5%.
- Full-year 2024 free cash flow margin is projected to be 31%.
Challenges Ahead
- Q1 2024 cRPO growth will be negatively impacted by 1.5 points due to the strength of the U.S. Federal business in Q3 2023.
- Q2 2024 cRPO growth will be negatively impacted by 2 points due to the strength of the U.S. Federal business in Q3 2023.
- The guidance is based on the 31-day average of foreign exchange rates for December 2023.
- Weighted-average shares used to compute diluted net income per share for full year 2024 is expected to be 208 million.
- Future performance is subject to risks and uncertainties, including cyber-security events, evolving privacy laws, and global economic conditions.